Stock Market News

Broker tips: BG Group, Tate & Lyle, SABMiller, AVEVA

Kepler Cheuvreux has lowered its recommendation for BG Group from 'hold' to 'reduce', saying that prevailing uncertainties are clouding the outlook for the oil and gas firm.

Analyst Peter Oppitzhauser said that BG's upstream portfolio "comes with high project delivery risk (high concentration risk, greater technical challenges and limited operatorship)". Meanwhile, the recent resignation of Chief Executive Chris Finlayson and the stock's current valuation levels add to short-term uncertainties, given that both factors "leave the company vulnerable as a potential M&A target, we think".

The outlook for sugar and sweetener maker Tate & Lyle remains "muted" following a challenging 2013/14, according to Davy Research which retained an 'underperform' rating on the stock.

"Earnings growth prospects deteriorated at Tate over the course of the year as softer US demand and competition in the sucralose market weighed on profits," said analyst Jack Gorman.

The valuation of drinks group SABMiller is now "too demanding", according to Investec which downgraded its rating on the stock from 'hold' to 'sell'.

Analyst Anthony Geard pointed out that the shares have had an "extraordinary run since early February", surging some 25% compared with the FTSE 100 which has only risen 6%. He said that the stock now trades at a "mid-teen premium to the peer group, which we regard as overly extended".

Numis Securities has reiterated its 'buy' recommendation for AVEVA after the software group's well-received annual results on Tuesday, saying the shares are significantly undervalued.

"AVEVA is a top quality business and we are comfortable that it is right to use any pull-backs as an opportunity to build positions," Numis said in a research report.

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